Hey Gary, hope all is well. I've been keeping close tabs on your posts and nightly report. I got so burned out this Spring that I can barely look at a chart these days. (even thought I did quite well) I had my own surgery and business is keeping me on my toes. I plan on adding soon, but not currently long much of anything. Nice to see the blog is still humming along.

Thanks as always for the good report, but the jobs number was hardly spectacular. If it had been double the 115k, maybe, but new unemployment claims numbers are still 400k + for 13 consecutive weeks, so we are a long way from good job numbers.

Felix,I agree with Gary that it is broken and therefore dangerous as it will probably behave erratically. Trapped longs could certainly be part of it and the overall mindset of traders will be extra vigilant causing crazy swings etc.. That said, I still think it has a decent run ahead of it but I am just playing it with smaller position and on a tighter leash. With all this caution it will probably double top or go higher just to tease.

This gold upmove was conceived in a big way on 17 June - have a look at the big, huge, and sometimes massive out of proportion, volumes that traded that day in GBG, AZK, NXG, RGLD, GSS, ANV, NGD, HMY, GOLD, IAG, IVN, GFI, BVN. It's particularly marked in smaller companies.

This was a concerted bank/institutional sector buy (or short-covering) which took out all the stock overhang right after the HUI had been driven down marginally below its 490 support pivots.

This all occurred before news of the Greek bailout on 23rd June and before gold was driven below 1500 from 23rd June to 1st July.

Leopards don't change their spots - would not be surprised to see HUI 600 marginal new highs on the upside as a target now.

Wave, I really have not gotten involved in stocks since 2002 but have been riding this gold bull since then. I have a couple systems for GDX/HUI but I prefer the lower stress of trading gold futures. Being able to get in and out around the clock is very important to me.

Gary-Looking at the SPX intermediate cycle, it seems like we have to take a stand and call the previous cycle either 30 weeks or 13 weeks. If it was in fact 30 weeks (which seems more likely due to many stretched cycles as of late), wont a very short cycle generally follow a long one? Could this cycle be 10-15 weeks and top in sub-4 to make it left translated?

Gary, do you still feel SLW is one of the best companies in the world? Do you think the strength of its model insulates it from volatility in the price of silver to make it a worthwhile exception to your current no-silver position?

I covered all my shorts (OIH, DUG, JCP, EPV). I was just looking for a scalp and we got it. Go PM's! I am hoping for a dip to add on. Some on the first sharp dip and more on the next DCL wherever that ends.

Looks like the boys are using the strength in gold here to take their profits on the miners, after this big run up. Miners due for some consolidation, we might get our 2nd bite at the miners soon enough.

The Open Interest on that far-dated GDX option is 89 contracts vs 10's of thousands in other more liquid at-the-money strikes. It will just be you versus the computer, and they like to move the goalposts on you a bit here and there. In-the-money options like this not traded as much as ATM and slightly out-of-the-money because they lose much of the characteristics of an option and other reasons. All this Dec deep-ITM option gives you is leverage, which you can find in DGP or futures to your heart's content. Plain vanilla options to use if you really want to go down that path are roughly 1-4 months out on the expiry and ATM or 5-15% OTM. Ofcourse, theoretically, you could still be totally right on the direction of gold with these but still lose money because of time decay and changes in the underlying volatility.

Silver lagging gold big time...last time this happened (a Friday again), silver crashed the next 4 days...if silver doesn't catch up before close, I will close 50% of my positions...will buy back at next dcl

Gold will tag the 10 sms In the next few days. That should give a good entry for new positions. Then it depends how early we are in the daily cycle whether a breakout will offer another chance to add, or if one should wait for the next dcl.

David,January 2012 GDX 45 calls is what you're asking about?My opinion is that you're going too far and too deep for your money. Personally, I would go with December 49 or 50 if you want to go that far. At this time the open interest is low but as time goes on it should go higher. Just my opinion.

Have you read the Options Delta tutorial that I posted the link to some time ago?

Besides the financial crises when the dollar rallied and all assets were dumped, gold has managed to put in strong and consistent IT cycles. There have been gold IT cycles with a rising dollar that have done well too.

I also like to keep reminding myself that a bull market of this size and age (11+ years) is going to get crazier by the cycle and believe it the rally's more vertical.

Even if the dollar does OK for say a year out of a new 3yr cycle, it's going to be window dressing. It will primarily do well on a Dollar Index basis, as the Euro accounts for 55%, weakness there will give us the illusion of a strong dollar. However against Gold, Swiss, Yes, Aussie/Canadian, the dollar got killed recently. Dollar index is a flawed measure of the dollar, IMO, especially when used to view possible gold performance.

David/Jenny,That call option for January 45 gives you a delta of .94 or so, quite high I think. As well, the timeframe is long in concurrence with analysis expectations.In other words, you are paying extra premium for a timeframe you are not going to benefit from.

So far there hasn`t been hardly any suffering so how could they start to institute qe3 already? But then, maybe what do logic and reason have to do with it? Of course not saying it`s not coming, but in what form? Did anybody hear anything more on Obamas job stimulus? I`ve been keeping an eye out but haven`t seen anything.

doing good brother, just watching and waiting, most likely going to start initial positions on a pullback. If no pullback I want to see how gold deals with 1550 resistance. Im still not competely convinced that the Intermediate cycle low is in. Reason being, all other intermediate cycles of this C-wave were 25 weeks or better, among other things I dont want to get into now because if the bottom is in it wont matter.

I doubt we would have a big down day this soon after an intermediate bottom, but it is conceivable that gold could form a bull flag or sideways consolidation to allow the 10 day moving average to catch up a little bit.

Gary,I understand your strategy in playing the gold ETFs, I've listened to your interviews on Contrary Investors Cafe, so I know you don't like the risk associated with miners. But, have you looked at Sandstorm Gold? They are a gold streaming company and the CEO is the former CFO of SLW. The stock has been doing really well recently and I'm sitting on a pile of the 2014 warrants (SNXXF.PK) and am up 50%. Just wanted to know if you are aware of this company and if you are what you thought about them.TIA

If we are headed into recession -- and the employment numbers seem to indicate that -- the dollar will strengthen. This will put pressure on stocks and gold. Sentiment has been reset in both, clearing the way for future declines in risk assets.

The miners may have bottomed ahead of gold, but I would proceed with caution.

Here's the thing. With ETF's I have no company specific risk so I can take larger positions.

Trying to pick individual mining stocks and outperform and ETF's is exciting, like gambling. But I'm not in this to gamble, I'm in this to make money. I want to do that with as little risk as possible. That means I will leave the individual mining companies to others.

I'm liking the looks if the pm complex more all the time. The 50 and10 dmas are ready to converge on the gdx which will likely line Up with Golds move to the 10 Low risk entry on a swing low near there.

History is indeed littered with broken parabolas that remain weak and continue down, but could the current strength in gold, gold and silver miners, and very committed COT on silver suggest that silver is coming along for the ride here?

I believe silver will double top near $50. It will rally with gold and then when the next gold correction comes will probably make new lows while gold may not. I agree with Gary that it is very unlikely to make new highs, but a rally to 48 is a nice percentage from here. It will not go down while gold rallies.

Once again, Gary has proven himself to be well ahead of the game. Excellent work spotting the bottom G-man. I can't wait to recoup some of the profits from silver's collapse so I can come to Vegas and buy you a few burritos! Hell, I'll even throw in a beer or two! :)

Éamonn, throwing money at the system helps prevent the formation of industries which will create jobs. Instead, it encourages malinvestment of capital, misallocation of resources, encourages speculation in the wrong crap; further, the ZIRP destroys the ability for retirees to supplement their income safely and drives many into risk assets which eventually will crater (ala '08) etc.

In other words, you can't print your way to prosperity. Iceland is a good example of an economy which is trying to avoid bailouts and is regaining it's footing the old fashioned, legitimate way.

Gary, that new industry SHOULD have been windmills; or solar (the little we have is starting to be offshored); or genuine cures for productivity sapping diseases like Parkinson's or MS (my brother has Parkinson's, and I've become aware that a cure will never be found in the US because of the incredible money made by treating symptoms). How about super efficient autos, using lightweight alloys? How about leading the world in LED technology?

It's deflation. I'm amazed that anyone is surprised given the two historical precedents -- the great depression and Japan in the 1990's. The world is awash in bad debt that acts like a black hole sucking up all the world's productive capital.

Until the debt is destroyed through repayment or (more likely) default, nothing is going to change.

Transportation, healthcare, early retirement benefits, security, and perks we don't even know about. Most industries and jobs have no retirement benefits other than your own IRA or 401 that you pay into. Not the politicians, they vote themselves raises and approve their own benefits. Where on earth does anyone do that other than a dictator? We need to start with them.

Gary, yes, new industry, like all my examples except auto. The auto part would be super efficient components of the industry perhaps.

Éamonn, the elite know that printing money doesn't help the general economy. They don't give a rat's ass about that -- it helps THEM, and that's all that matters. The elite get the freshly counterfeited FED monies, e.g. the military industrial complex, the bankers, the TBTF institutions which have their losses transferred to taxpayers.

The mistake people make is in thinking they are stupid; they aren't -- they just don't work for US. Follow the money and the transfer of wealth. It's not an accident that the elite have possession of more of the national income and a greater share of the national wealth than at any other time in US history. Bernanke works for THEM, not us.

So... we are all here because a side effect of their egregious monetary policy is to fan the flames of the gold bull. We are some of the few who will be spared (assuming we don't screw up with a million dollars of out-of-the-money options that go the other way...).

James Altucher had a very intriguing idea the other day. His suggestion was to do away with Congress. They don't actually represent the will of their constituents anymore. They are bought by lobbyists.

With the Internet nowadays the population could easily vote on any new laws and the will of the people would prevail. There are too many of us for the lobbyists to buy our votes.

In California, they have police captains earning nearly 1/4 million per year, fire and police able to retire at > 100% of their earned income when they are just 52-55 years old.

Those sorts of things must, and will end.

In private industry, just look at CEO salaries. Those few individuals rob a company of future prospects. In the past 10 years, maintaining the CEO rocket trajectory of increases and literally required jobs to be offshored.

Lack of employment opportunities for millions of Americans should come as no surprise to anybody.

Yes, I agree Gary, what started out as part time positions, they manuevered themselves into full time paying jobs and benefits instead of serving the people who elected them. They serve who stuffs their pockets with cash. Funny how they all write books now. Must be nice to have so much time on your hands, that you can write a book?

Most politicians don't have a clue. All they care about is their next election.

On that subject, All politicians shouldn't get paid with public money during their re-election campaigns. Let's see how long Obama spends traveling the country during his campain like many past presidents. They have a country to run.

I've got a hundred more, but I'm going out to dinner to fill my belly and spur the economy.

We are sitting in our favorite café in Paris...listening to the Beach Boys and reflecting on the decline of the US Empire. Back in the '60s, the Beach Boys celebrated a country that was young, growing, optimistic...and a winner. Now, what we see is the whole kit-and- kaboodle of life in the US giving way to desperation, delusion and an irresistible impulse to commit imperial suicide. The economy turns sour. The military becomes malignant. Households are corrupt, bankrupt and dependent. Even the churches sing their hallelujahs to Caesar now.

What's "imperial suicide?" It's what empires do. If no other empire arises to kill them...they kill themselves. China will probably eventually crush the US militarily. But that is far in the future. The US can't wait. It lets the zombies run wild.

At home, Congress debates a "debt ceiling" measure, as if it made any difference. They've raised the ceiling 93 times since they first imposed a debt ceiling 94 years ago. What are the odds that they will hold the line this time?

The US economy was a free-market success story for a hundred years...from the end of the US War Between the States to the end of the Vietnam War. It was the richest, fastest-growing, most innovative, most competitive, and most admired economy in the world. But then, in 1971, Richard Nixon replaced a more-or-less solid dollar, vaguely backed by gold, with a pure paper dollar, backed by nothing but the good intentions of government employees.

Is it possible that the US government could stop people from transferring money out of the country? I read somewhere too that they could force a percentage of your brokerage account into US Treasuries if they are stuck for money...

SF G fan, I have to agree with you, however Obama has been running for next election since his last election. It's a joke. I love how the families travel around the 3rd and 4th years in office on our dimes. (Oh yeah, good will).

Eamonn, they can do whatever they want, and it will start with govt employees, since they fund and manage the accounts. Main reason I had my hubby transfer his govt funds to Fidelity. One step further away from their hands.

Chuck reed mayor of San Jose is doing just that. If police and fire don't take benefit cuts he will reduce head count. It make me sick to pay a fireman to sleep on the job. Work them 8 hrs and sent em home just like cops. They get 3% per year in retirement. So after 30 years = 90% of pay. Then they get a 3% increase per year. So after 3 years they are making 100% of their salary an then they work part time for the department they retired from.

Take a look a Jim Sinclairs mindset website. Scroll down a way and he has a great video segment of David Stockman making a great case against Fed actions and policy. He argues that he was just looking after the elite of Wall Street, not the US economy.

They way they have retired at >100% is by cashing out vacation days (and sick days?) and getting the lump sum to factor into the equation.

Worse, if you are a fireman or cop where the pay is 40k a year for 25 years and transfer e.g. to Orange county to 150-240k a year, your retirement is computed based on the highest years and hence you could retire at 135-250k per year even though most of your life you earned 40k in podunkville.

In California we have a ballot initiative system that works much as you describe, Gary.

Unfortunately, the citizenry here is no different from politicians -- they may say they oppose spending in surveys, but they routinely vote for expensive ballot initiatives that are to be paid for through "bond issuance", i.e. more debt.

Then they vote to cap the property taxes that would actually pay the bills they're incurring.

The reality is that politicians borrow and spend because voters like it that way. People love government spending -- Social Security and Medicare are the most popular programs in existence, and they represent the majority of the federal budget (discretionary spending only accounts for 13% of the budget).

In this country we have become like children. We expect the state and federal government to maintain roads, the national defense, the USDA to keep our food from being poisoned, to pay for our health care in our old age -- we just don't want to pay the bill. In this sense we are much like Greece, where nobody pays taxes but everyone expects to retire with a pension at 50.

This was not how it was in our grandparents' generation. They understood that nothing comes for free, and that bills must be paid.

Until the culture changes where we are willing to pay for the services government provides or do without those services, nothing will change, regardless of what system of government we have.

The only thing that will change things is when our debt burden forces us to make these choices, much as Greece is being forced to right now.

What you refer to is known as currency controls. Just review how Argentina screwed it's citizens over and over for the playbook that might come to the US. Marc Faber has said he believes the end game in the US will involve currency controls (to trap you in US dollars) and in the confiscation of gold (although I really don't know WHY they would do that unless a gold standard were considered anyway).

Other stuff in Argentina though -- confiscating retirement funds (401k, IRA type stuff). They would do that "for our own good" and they'd give us credits in a privatized SS system. In short, you'd be screwed, and they would force you to buy the debt that they are defaulting on via monetary inflation.

If I hear substantial rumbling about currency controls, I will be taking a trip to Canada.

Ben, Why do you think we are here. I certainly don't want to have to depend on anyone. Especially the govt. However, whatever we make here, they will figure out a way to take it from us also. So who knows who will be better off.

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